Alleged Loan Modification Racket Continues To Operate Despite Warnings From Law Enforcement, Lender

In Oakland, California, a recent story from The Bay Citizen shines some light on Priority Realty Group, a suspected loan modification, foreclosure rescue racket based in Southern California that has attracted attention from the media, the California Attorney General's Office, and the Better Business Bureau for, among other things, allegedly using written solicitations designed to create the false impression that the mailings are coming from lender JP Morgan Chase Bank:

• Priority Realty is one of hundreds of for-profit companies that seek to benefit from the pain of homeowners hit hard by the recession. [...] When [struggling homeowner Giselle] Jiles called them, a representative of the company said they would handle her loan modification request if she paid them the equivalent of one mortgage payment.

• To get around a new state law banning mortgage modification firms from charging for services in advance, a company representative said they would charge her “as services are rendered, every step of the way,” from a fee for receiving her loan information to a fee for faxing that information over to Chase.

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• Priority Realty has an F rating from the Better Business Bureau, and BBB’s website is full of complaints from homeowners who say they were swindled by the Southern California company. One of them, California National Guardsman Erik Kallstrom, said he paid Priority $1,632, persuaded by their 100 percent money back guarantee. But when the company failed to renegotiate his mortgage, it refunded only $25, saying the balance had been absorbed by “earned fees.”

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• Evan Westrup, a spokesperson for Attorney General Jerry Brown’s office, said Priority Realty has failed to register with his office or to post a $100,000 bond as required by state law. In the last two years, Brown has sought court orders to shut down more than 30 fraudulent foreclosure relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of other deceptive loan modification consultants. But Westrup admits that represents a small fraction of mortgage fraud being perpetrated.

• “The loan modification industry is filled with con artists and swindlers who rip off desperate homeowners,” he said. “Ultimately, consumers have to be able to spot a scam themselves.”

• Chase spokesperson Tom Kelly said the bank’s legal department sent a strongly worded letter to the company, which “demanded that Priority Financial Group and its affiliates omit all references to Chase, Washington Mutual Bank, and any affiliates from its solicitations.” “The marketing campaign clearly creates a likelihood of confusion among Chase’s borrowers,” Kelly said.

• Despite the letters from Chase and law enforcement, Priority Financial has continued to operate, but under a new name. David Gomez, who was listed with the Department of Real Estate as the company’s broker, said he is now the “branch manager” at the Freedom Law Center, which he said operates under a license from the State Bar. As such, he said, there was no need for his firm to register with the attorney general’s office or to pay a bond, adding that his company never poses as a bank.

For the story, see Using Chase Name, Phony Agents Prey on Homeowners (Foreclosure crisis primed fraudulent mortgage relief businesses).